Govt plans to finance development projects by issuing Islamic product of Sukuk: Dar

KARACHI: Minister for Finance and Economic Affairs Senator Muhammad Ishaq Dar has said that the Federal Government is planning to finance bulk of its development and infrastructure projects by issuing Islamic product of Sukuk of varying nature and maturity.

He was making closing remarks at the Roundtable Conference on Potential of Islamic Banking in Pakistan in Karachi on Wednesday.

The Finance Minister said this will enable Islamic banks to deploy their liquidity and longer term funds in strategically important infrastructure projects and improve discipline and transparency in public sector development schemes.

He said the government will also help and facilitate Islamic banks to make investment in big corporate farms, live stock and dairy farms, fruit and vegetable farms.

This would improve much needed investment in the agriculture sector, improve agricultural productivity and provide an attractive investment avenue to Islamic banks to deploy their growing deposit base.

The Finance Minister asked Islamic banks to make investment in low cost housing projects to enable the low income population to have their own houses at affordable rates. The government would provide Islamic banks every possible help including changes in legal and regulatory framework to initiate such projects.

He said there was a need to give a big push to the process of Islamization of banking and finance in Pakistan.

The Minister said that the Government has already constituted a committee with a fairly broad mandate on the subject.

The Committee will make recommendations for removal of all difficulties being faced by the existing Islamic financial institutions; design new products; review conventional banking system with a view to bringing it in line with Shariah compliant methods and examine the possibility of organizing futures markets on the basis of Islamic principles of finance.

Ishaq Dar said the committee will also suggest by the end of the year a road map and timeframe for progression of various phases of Islamic banking in the country.